Over 4,500 retailers sign up for UAE’s tourist VAT refund scheme

Over 4,500 retail stores have linked their systems to the tax refunds for tourists scheme which is set to be implemented from Sunday, November 18, 2018, at Abu Dhabi, Dubai and Sharjah International Airports.

The Federal Tax Authority (FTA) confirmed that representatives from the participating retail stores have been trained to operate the system.

The company hired to operate the system, Planet, has completed all necessary tests to ensure the system is running “efficiently and accurately”, the FTA said.

FTA director general Khalid Ali Al Bustani also confirmed that the number of participating retailers from across the UAE is expected to rise next month as the scheme enters its second phase.

Preparations are underway for phase two, which goes into effect on December 16, 2018, allowing overseas tourists to claim refunds of taxes at all other UAE airports and land and sea ports, he added.

Also read: UAE says tourists can reclaim VAT from November 18

Ahead of implementation, the FTA has clarified certain key aspects of the scheme.

The authority will collect an administrative fee amounting to 15 per cent of the VAT amount refunded to the overseas tourist, and a fixed fee of Dhs4.8 for every claim.

The operator of the scheme – Planet – will deduct these fees from the total amount to be refunded to the overseas tourist on behalf of the FTA.

The FTA also stated that the maximum cash amount that can be returned to a tourist for a 24-hour period is Dhs10,000.

Tourists also cannot claim VAT refund unless the total value of tax-inclusive purchases issued by the retailer is Dhs250 or more.

The scheme has set “clear, transparent and accurate criteria for the procedures to be followed to reclaim VAT for tourists”, said Al Bustani.

“Among the incentives offered by the new system is the refund of VAT on purchases of up to Dhs10,000 in cash for every overseas tourist within every 24 hours, which is high compared to the values allowed to be refunded in cash in many countries of the world, while there is no maximum cap where amounts due for refund are paid to the tourist’s credit card,” he added.

The official also cautioned that only invoices issued by retailers who are registered for the scheme and connected to the system are eligible for a refund by tourists.

Participating retailers can be identified by posters they should display clearly on their storefronts.

The Authority also outlined several conditions for a tourist to be eligible for a tax refund, namely:

* The tourist needs to be at least 18 years old

* The tourist must have made the purchase in the UAE

* The goods are actually exported out of the UAE by the tourist within three months of the date of supply

Also read: Here’s how the UAE’s VAT refund system for tourists will work

“The FTA is keen to contribute to increasing tourism attractiveness, encouraging domestic trade and establishing the country as a central trading hub in the region,” added Al Bustani.